Thursday, April 30, 2009

Removing All Doubts

Ross Douthat, in an Atlantic column, called out Linda Hirshman on subsidies:

... if you're more of a Linda Hirshman-style feminist, on the other hand, you'll probably prefer the Scandinavian model, where after the guaranteed family leave runs its course, the socialized day care effectively incentivizes parents to get (back) to work whether they want to or not.

Ms. Hirschman responded with a post which, though meant to instruct onlookers of Mr. Douthat's boundless ignorance, turns out to be an instructive face plant. She compares the effect of subsidies with that of her own idea of tax cuts:

Case #1: The Socialist enslavement model

A family makes $100,000 in income and pays $50,000 in taxes and the government offers them public day care worth $20,000 and they take it. They have effective after tax income of $70,000. So they have a $20,000 incentive to use the government benefit and not have the mother quit her job and stay home with the children.Case #2: Douthat "freedom" model

If a family makes $100,000 and pays $50,000 in taxes and the government offers them a tax break worth $20,000 off their taxes if the mother stays home with the children, and they take it. They have an effective after tax income of $70,000. So they have a $20,000 incentive to have her quit her job and stay home with the children.Fancy that: tax cuts, government benefits, from the standpoint of pushingpeople to do something, it's the same.

Alas, this "case #2" relies on the tax cut not being available unless the mother stays home; and this feature, so crucial to Ms. Hirshman's case, is pure projection on her part. The proposal itself contains no such feature, saying instead

The plan ... would be available to all parents no matter how much they earn, with the limit being the amount they pay in income and payroll taxes.

Ms. Hirshman was apparently in haste to illustrate her opponents' evil nature, and full of eagerness to demonstrate their inferior intelligence, so her entire post is written in the tone of one ministering to the mentally deficient:

That's because (repeat after me)MoneyIsFungible.

But all this rather clumsy rhetoric collapses on a simple obstacle: Ms. Hirshman apparently cannot comprehend that Mr. Douthat is not supporting government incentives but their absence -- what we would crudely call freedom.